Business Environment Report: British Airways - Analysis of Factors

This report provides a detailed analysis of the business environment, focusing on British Airways. It begins by defining the business environment and its impact, followed by an examination of different organizational types, legal structures, and their purposes, including public, private, and voluntary sectors, as well as micro, small, and medium enterprises. The report then explores the scope and size of various organizations, including transnational, international, global, and multinational companies, and differentiates between franchising, joint ventures, and licensing. The report also examines market forces and the responsibilities of British Airways towards its stakeholders, including employees, suppliers, customers, lenders, and the government. Furthermore, the report delves into the relationship between organizational functions such as production, marketing, human resources, and finance/accounting, and how these functions link to organizational objectives. The report also applies SWOT and PESTLE analyses to assess internal strengths and weaknesses and the impact of the macro-environment. The report concludes by summarizing the key findings regarding the business environment of British Airways and its implications.

THE BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1 ...........................................................................................................................................3
P1. Different types and purposes of organisations and legal structures of forms of business3
P2. Explain the scope and size of a range of different types of organisations .....................5
P3. The relationship between organisational functions and their link organisational objectives
................................................................................................................................................7
TASK 2..........................................................................................................................................10
P4. The positive and negative impacts the macro environment has upon business operations10
P5 Conduct internal and external analysis of organisations to identify strengths and
weaknesses...........................................................................................................................12
P6. Explain how strengths and weaknesses interrelate with external macro factors ...........13
CONCLUSION .............................................................................................................................14
REFERENCES ..........................................................................................................................14

INTRODUCTION
Business environment refers to all internal and external factors which influence business
environment. It very important to take into consideration all these factors. So that company can
functions in smooth manner. Its very vital that every enterprise should meet customers needs.
Internal factors are those factors which take place inside the firms. And external factor related to
elements which take place outside an organisation. These external factors are not under
controllable by a firm (Blanchard, Tolbert and Mencken, 2012).
The company which is taken into consideration in this report is British airways. It is
largest airlines in UK. It is 3rd largest airlines in revenue earning. It is full global service airlines.
This enterprise provide lower fares and give global routine flying experiences.
In this report different kind of organisation has mention. Different size and scope of these
enterprises are discuss in this assignment. The different function of organisation has been discuss
and the report and there impact on business objectives. The SWOT and PESTLE model is
mention in report. The interrelation of strength and weakness with the macro environment is
described in this report.
TASK 1
P1. Different types and purposes of organisations and legal structures of forms of business
There are mainly three type of organisation. Such as private, government and voluntary
organisation.
 Public sector organisation: This kind of enterprises are part of economy. These
companies hold and control by government. These firms are funded by taxes collected
by various government sources. The main motive of these firms are to earn small profit
and serve its country decision. British airlines is one of the government owned company.
 Private sector: Private sector is owned by private individual. Main motive of these
companies are to earn profits and customer satisfaction. In UK Tesco is biggest grocery
company (Boons and Lüdeke-Freund, 2013). Tesco having its business in other countries
also. The employees are motivated to earn money in this kind of enterprise.
 Voluntary sector: This sector is non profit sector. These enterprises are work for a
motive and that motive is to do welfare of people. These firm are not government owned.

Example of voluntary firm is world vision. These organisation raise the funds through
clarity and donation (Bryman and Bell, 2015).
Difference between private, public and voluntary
Basics Private
(Tesco, virgin)
Public
(British airways)
Voluntary
(Diabetes UK, NHS)
Meaning These enterprises are
owned by individual.
These companies are
owned by government.
These organisation are
formed to serve the
society.
objectives The objectives of private
company is to earn
profits.
The objective is to serve
citizen of that particular
country.
Main objective is to do
welfare of people.
Raise the money Private firm raise money
from debts and equity.
Public firm raise capital
from taxes, duties.
The fund raised by
these enterprises are
from charity and
donation.
Benefit of job In private company
employees get good
salary and opportunities.
In public enterprise
employees get security
and life term plans.
The employees those
who want to help
needy people. They get
satisfaction.
(Sources: Difference Between Public Sector and Private Sector, 2017)
Difference between micro, small and medium enterprises
Basics Micro Small Medium
Business purposes Business purpose of
micro enterprise is add
value to economy.
Main business purpose
to serve customers by
their special skills and
abilities.
Business purpose to
provide wide range of
products to customers
Objectives Is to create job
opportunity.
To growth their
business.
Become one of the
biggest enterprise and

Enhancing income. earn higher profits.
Supply of goods and
services
Low supply of good
and services as they
establish their
business with low
capital.
In this they want to
meet the supply to the
demand. For they
bring new machines
and plant which can
produce more.
Adequate supply of
goods as resources and
capital both are easily
available.
(Sources: Difference Between Micro, Small & Medium Enterprises and their Validity,
2016)
Legal form of organisation Sole trader: In this type of business there are less formalities. Size of business is small
and business men and business both considered as same entity. Sole trader need to record
all transaction and make annual report (Cai and Yang, 2014). Partnership: It is agreement between two parties who comes together to do business
together. This deed contain of many rules, regulation and formalities. This formal relation
take place between the partners (Cavusgil and et. al, 2014).
 Company: Company is having its totally different entity from its owner. There is
memorandum of association and article which is prepared during formation of company.
The legal formalities are there which is need to be completed by owners.
P2. Explain the scope and size of a range of different types of organisations
The size and range of every business are different from each other because of capital
available to them. There are three type enterprises which are taking below is large, medium and
small these organisation have different nature, operation, size and range of product and services.
Difference between large, medium and small enterprises
Basics Large Medium Small

Objectives To expand its business
in other countries and
attract more customers
to earn profits.
To achieve long term
plans and increase
efficiency of
employees.
To grow its business
and utilise resources
properly.
Market share Having large market
share.
Having business in
domestic and few
more countries.
Domestic are is
covered by these
enterprise.
Profit share Having high profit
share
Good profit share but
less than large
enterprise
Having low profit
margin.
Growth and
sustainability
High Moderate High
There are different level of enterprises. These organisation are mention below. Transnational organisation: These companies are combination of international,
multinational and global companies. The structure of these enterprises are very complex.
The nature of these firms are very flexible (Chen and et. al, 2014). International organisation: These companies doesn't have its own operation in other
countries. They just sell their goods and services in other countries by exporting. Global growth: These companies are having its business operation globally. They are
having global opportunities. They serve wide range of customers and are capable to
achieve their objectives effectively. British airlines comes under global growth as they
are having their business globally.
 Multinational organisation: The range of countries are limited. Multinational companies
are those enterprises which is having its operation in two or countries.
Differences between franchising, joint ventures and licensing
Basics Franchising Joint ventures Licensing
Meaning In franchise the
franchisor allow
franchise to use
company brand name
In this two companies
come together to do
one particular project.
In this licensor allow
licensee to
manufacture product
by name of licensor

to produce goods and
services.
brand name.
Registration Mandatory Mandatory Not necessary
Training and support Necessary Provided No needed Not needed
Degree of control Has control on brand
position and franchisee
Companies are doing
their work
independently.
Less control
Market forces refers to effect of aggregate demand and supply on the prices of goods and
services. When supply decrease it increase the prices. Whereas when prices comes down demand
decrease and supply increases. The major problem of economy is that the use of resources are
very high but another problem is these resources are scare in nature. Scarcity take place when
demand of particular product is very high. For example in airlines the major resources which are
used is oil and petrol (Crane and Matten, 2016). These are natural resources. In this case the
society decides who needs what. By this resources can be properly allocated. It is very important
for every business to use natural resources every carefully so that it can sustain long in market.
Responsibility of company (British Airways) towards its stakeholders: Stakeholders are very
important part of enterprise. Every stakeholders is having its different needs and expectations.
Company should give concern towards them. Following are things which stakeholders want from
company.
 They need authority, power and recognition that comes along with their job.
 Employees want job security, income and future opportunities
 Suppliers wants regular payment with their order placed.
 Customers wants good quality of products and have easy access on them
 Lenders want interest on time.
 Government wants taxes, fair practices to be conduct in businesses
Every organisation need to fulfil these needs of stake holders. It take great efforts to
satisfy these needs. British airlines is a company who is continuous satisfying its stakeholders
requirements (Ferraro and Briody, 2017). They serve their customers in effective manner and
fulfil need of their stake holder so that business can grow.

P3. The relationship between organisational functions and their link organisational objectives
There are different kind of function are there within an organisation. They are department
of an enterprise. Each department is having its own roles and responsibilities. Following are
different department with their roles.
Production department: This department undertakes all the activities related to
manufacturing of goods and services. The production department is having following aspects
such as.
 Preparing schedule of production
 Monitoring and controlling workforce involve in production
 Improve product quality
 Regular maintain equipment and machines
 Making product in best possible manner
The services provided by British airlines is providing different services related to travel
to their customers. They made different schedule according to different countries and facilitate
other services like food.
Marketing function: Marketing department is responsible for identify customers needs
and make them satisfy (Smith, 2012). They involve in research process where they find what
customers wants. Following are roles of this department.
 Provide right product to right customer
 Fixing right prices according to product worth
 Involve in promotion activities to generate awareness among customers
 Responsible to make availability of product
In British airways marketing department is liable to communicate with pubic and
knowledge them about their services. Marketing department also promote nee services to create
awarness.
Human resources department: Functions of HR department are as follow.
 This department is responsible for recruit of new candidates
 Give training and development to their employees
 Solve conflicts matter in an enterprises
 Evaluate appraisals
 Look after health and safety measures

In British airlines HR department is liable for recruiting new people, give training nad
development and design appraisals.
Finance And Accounting Department: This department is handle finance matter of
company (Palo and Tähtinen, 2011). They record all transaction and prepare final accounts to see
final position of company. Following are roles and function of finance and accounting
department.
 Keeping record for transaction happening in enterprises
 Keep financial records
 Prepare final accounts such as balance sheet, profit and loss, trail balance etc.
 Preparing management accounting information.
BA finance department all issues related to finance. They record all expenses and
revenues which are outgoing and incoming. The cash generate by company from ticket and
expenditure incurring on providing services to its customers and maintaining their air crafts.
These all department are interrelated to each other. Each department should have
knowledge about other department work. Marketing department research about product and give
information to production department so that they should know what product they need to make
and produce. Production department give information to finance department so that they can
prepare budget for all activities. HR department recruit people who can engaged in new
activities. These function level to generate coordination which can help enterprise to achieve its
mission, vision and objectives of firm. This also generate transparency between different
department and make easy to increase smoothness in business operation. If company do all its
activities on time then they can achieve to its final goals very easily.
Different organisation structure
Enterprises are formed and structure in a manner so that they can achieve their goals and
aims effectively (Schaltegger, Lüdeke-Freund and Hansen, 2012). Every organisation can
increase their sales and profits by proper understanding of customers needs. This needs are
properly matched up with structure they use to operate. Their are different kind of structure
which are given below.
 Functional structure: This type of structure is very good for small business. In this
different department are their having its roles and responsibility. In these department
every person having its own set of skills. But there is one disadvantage of this

structure is enterprise face problem to coordinate with different department because of
business boundaries (Sena Ferreira and et. al, 2012.).
 Divisional structure: In this type structure large organisation make division of their
sub business and operate in separate structure. These sub brands are operate in one
umbrella. The main advantage of this structure is needs are meet very rapidly. But
communication barriers are there as every employees is working in their own division
so less interaction is there between workers. This structure is costly because of having
its large size and complex nature. Example company have its different marketing team
in different cities.
 Matrix: The another type of structure is matrix. This structure is combination of
divisional and functional structure. This kind of structure is mostly used in large
enterprises. This structure allow benefits of functional and divisional structure in on e
organisation. By this company has dual management. A functional and a product or
divisional manger are working on same level.
B.A follow divisional structure in which every different sub business having its different
structure. Because British airlines having its large operation so this structure is suitable for this
enterprise.
Strategic business unit(SBU's): This is concept which focus on product offering and market
segment. This concept can used to analysis of competition and marketing campaigns. A business
unit have one or more SBU's which are responsibility for their own profitability. This factor can
influence performance of an enterprises (Solomon, 2014). This unit is separate unit but has
importance in business. This unit focused in target market. The best example of SBU's is LG,
Unilever. They are having their different product category which are having different operations
but impact on business performance as whole.
TASK 2
P4. The positive and negative impacts the macro environment has upon business operations
There are many factors which influence business environment. These factors are external
and internal. External factors are those factors which has great impact on business performance.
These factors are not under control of enterprise. So they only can make strategies to face these

challenges. This elements have negative as well as positive impact on business operations.
Following are the factors which influence firm.
 Political factors: These factors are implemented by government of country. These factors
includes taxes, fiscal policies which can affect business operations.
Negative impact: The political environment of UK is unstable because of citizen of UK is
spending less on products in order to save money. This can impact on airlines as the company is
planning to expand its operation and bring number of flights. By these they cannot increase
numbers of flights. In recent years in UK there is volcano crisis took place which cause bad
impact on flights engines. Because of this many passenger stuck at holidays place and they spend
more on accommodation (Ullah and Lai, 2011). Because of this European laws indicate that all
airlines company need to refund passengers amount which brings losses for an enterprise. When
taxes raises by government its also increase flights rates which affect sales of company. People
likely to save more rather than spending money.
Positive impact: The number of tourism is increase in British that have positive impact on
British airlines because more number of people are booking tickets and using flights to travel.
 Economic factors: Economy factors are affected by exchange rates, interest rates and
GDP of country. Economy of country has major impact on the British airways
passengers.
Positive impact: When the GDP of country increase the demand of airlines also increases
Less people are taking holidays and this lead to decrease in customers of British airlines. This
tend to rise in revenues for company.
Negative impact: If interest rate is becoming high in this case people tends to save more
rather than spending money so the demand of airlines also decreases. Socio cultural factors: Socio culture is a factors which is influence by people those who
share same values, belief and norms. Company need to satisfy needs and wants of these
customers by meeting their expectations. BA focus on customers those who wants to
have holidays in Europe and other places in the world. BA has both national and
international operation and always managed to have good reputation in market. This
airlines is commonly engaged in friendly safe airlines. They provide better quality of
services and offer flights according to customer budget. But as there is a problem
according to flights prices they do not provide food and comfortable sitting arrangements.

Positive impact: If citizen of UK like to travel more because of their work nature the
demand rises accordingly.
Negative impact: If there is negative perception among people of UK. The deamnd of
airlines can be affected by this.
 Technology factor: BA use high technology in their operation to make its customer
satisfied. There are self services for customer checking.
Positive impact: The customer need not stand in queue (Wheelen and Hunger, 2011). It
saves customers time. Customer need not to come to airport before hours for boarding and check
in flights. This make check in process very fast. The enterprise official website gives lots of
opportunities for clients. They check online about BA flight tickets and special deal offer by
organisation. In this case role of agent is eliminated and company can save their reputation if
agent is unprofessional.
Negative Impact: The technology have negative impact like there is more chances of high
jacks. Which can affect airlines in negative manner. There are many people those who are not
able adopt new technologies because of their rigidity nature. By this customer dissatisfaction can
be increases. Legal factors: The company is following all legal rules and regulation applied by legal
authorities. The process of airlines business are being controlled. There are issues in
infrastructure to route flights. An enterprise need to keep in mind about modern securities
and environmental needs.
 Environmental factors: There are many factors faced by company regarding to
environmental such as air, noise, land taken and waste management. So BA need to cope
with these environmental factors (Wild, Wild and Han, 2014). An enterprise need to
control radiations and emissions. So every airlines need to follow national, international
and local regulations.
Positive impact: This can tends to save environment and company can establish good
reputation in market place.
Negative impact: The cost company can be increases because they need to adopt many
new technologies which can incurred high cost.

P5 Conduct internal and external analysis of organisations to identify strengths and weaknesses
For internal analysis SWOT model has been used. SWOT stands for strength, weakness,
opportunities and threats.
Strength:
 company is having more than 90 years of experience.
 Company is highest revenue airlines and also associated with IAGC.
 It is also having strong brand name
 company is backed by UK government.
 Enterprise is having its own engineering to maintain aircraft.
 It is providing online ordering system which gives them strong online presence
weakness:
 Having high dependence in UK market High employees turnover cost
Opportunities:
 Enterprise is having opportunity to expand its market to other countries
 Due to government intervention many airlines companies are existing in market. So
company has opportunity to have competitive advantage.
Threats:
 There are many other competition in market who gives good competition to company in
terms cost.
 Regular changing of government regulations.
 Due to infrastructure development many other transport alternatives are coming.
These are all factors which can influences business performance. So an enterprise need to
regular look after these factors so that they can sustain in market for longer run and run their
business by meeting customers needs.
P6. Explain how strengths and weaknesses interrelate with external macro factors
SWOT and PESTLE are interrelated to each other. SWOT is done for internal
environment whether PESTLE is done for external environment. PESTLE refers to political.
Economical, social, technological, legal and environmental. SWOT refers to strength, weakness,
opportunities and threats. In PEST and SWOT T is common. SWOT influences by PESTLE. If
there is any changes take place in external market it impact on company's strength and weakness.

If company is able to meet customers social needs than it can be strength for firm. While when
firm is not able to run its business according to government norms then its a weakness for
company (Zott, Amit and Massa, 2011). Every enterprise need to make its system more flexible
so that they can easily face external factors. By PESTLE analysis company can determine their
weakness and strengths which they are facing. According to that they take actions to come over
their weakness. British airlines are providing cheap prices so that they can expand their market in
other countries. The strategies which are taken by company are based on their organisational
department likes HR, marketing and finance.
CONCLUSION
In report talk about different type of enterprises. These enterprises are government,
private and voluntary. These are having its different market share, organisation structure and size
of business. There are different forms of business such as sole trader, partnership and company.
And these forms have its own legal structure which affects business operation. Every company is
having its own operation some the firms are operating in local market, some of them are
multinational and international companies. All these organization have different goals and
objectives. There are different modes of entry by which one enterprise can enter into other
market. These modes are joint venture, franchise and licensing. In every business unit there are
different department having their own roles and responsibility. British airlines regularly analysis
its external and internal market because these factors have great impact on business.
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SWOT analysis of British Airways – British airways SWOT. 2008-16. [Online]. Available
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